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World Dumping US Treasuries
12 February 2023Banks Are Safe Right?
16 March 2023Yesterday life was going along as usual. Everything was fine, well …. as fine as things can be under the current economical conditions. The Federal Reserve in the US said a couple weeks ago that inflation was under control and the whole world heaved a sigh of relief. Things are going to be fine.
This morning I wake up to a train smash before I even had my first cupper. The SA rand went from 18.23 yesterday to 18.60 to the US dollar overnight. The silver price slumped from $21.05 to $19.93 this morning. What was going on! There are only two things in the world that can cause this havoc. Either the real value of silver has gone down or, the US dollar became a lot stronger overnight. So, fist thing first. Let us look at the graphs. They always tell the truth, the whole truth and nothing but the truth. Wish I could say the same about our politicians.
Looking at the graph on the left, it is very clear that the US dollar has strengthened considerably overnight. The graph on the right shows the drop in the silver price. The stronger the US dollar of course, the weaker the gold and silver prices. The next question is why did the US dollar strengthen so much?
The answer is the Federal Reserve Chair, Jerome Powell, warned in a speech last night that the Fed will jack up interest rates to fight rising inflation. The markets did not expect this and subsequently tumbled dragging gold and silver with it. The drop in the precious metal prices is sentimental and not value driven. History shows us that these prices will go back up to fair value real soon.
These events have now presented an unique opportunity to top up our physical gold and silver investments at these low prices.